Buildings Owned by One of “Ten Worst Landlords” Finally Being Sold — But Who’s Buying?

September 23, 2010

Some of the worst buildings we described in this year’s “Ten Worst Landlords” are apparently going to be sold — which may be very good news for residents.

But if that’s the case, why is the bank involved keeping the name of the purchaser secret?

The parcel of properties, known as the Milbank portfolio, has been the subject of rumors lately, as the Bronx buildings, in severe distress, have been up for sale.

The buildings are owned by the Yashouafar brothers, Iranian Jews based out of Los Angeles who we profiled earlier this year in our series. Today, tenants and advocates say the buildings are in even worse condition than when we wrote about them in March.

But so far — and despite pressure from some local councilmembers — bankers are keeping mum on the identity of the buyer. (The building sits in a commercial mortgage-backed security controlled by Wells Fargo and is serviced by a Miami-based financial company called LNR.)

The companies had been sued by tenants, who argued that the bank should be doing some of those underlying structural repairs that will make the buildings livable. Whoever the new owner is, someone is going to have to do a better job than is being done now.

But so far, no one has been able to agree on what makes the buildings livable. Some say that far-flung private-equity companies like Milbank took on the buildings not knowing — or not caring to know — the terrible conditions they were in. Today, an independent architecture firm will release a detailed 25-page report on the actual conditions of the building and what it would cost to fix them. (This is officially called capital needs assessment.) Not surprisingly, “The costs are sky high,” says Dina Levy, director of the Urban Homesteading Assistance Board, one of the housing groups that commissioned the study.

While the new buyer isn’t known, the financial service company has disclosed some information that City Councilmembers like Annabel Palma, and advocates like Levy, say leaves serious cause for concern. The new buyer is planning on taking on Milbank’s $35 million mortgage, a hefty sum that critics have argued caused the buildings to be overleveraged and ultimately starved of repairs.